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Hello,
Hope that someone can just give me some advice please.
I will be 55 soon and I have a Xerox final salary pension but they say I don't have enough pension to meet the GMP.
I joined the pension in 1991 and left in 2002.
Deferred pension when I left was £3526.80.
Pension in 2017 was £5912.56 so that's about a 70% increase in 16 years.
The transfer value is £101960.
Will it be better just to keep the pension in the Xerox scheme and just wait until I can receive it, and do you know how many more years I will have to wait?.
Or do I just take the pot and buy a annuity with it.
If I do go down the second route I do know that I will need to get some finance advice.

This means, the Guaranteed Minimum Pension the scheme must pay at GMP age will be higher than if you took your pension now, early (and therefore with an 'actuarial reduction'), and received ordinary scheme increases to GMP age. So, the scheme won't allow you to take the pension early.

“

I joined the pension in 1991 and left in 2002.

”

If you left before 6th April (maybe) and the scheme uses the so-called 'fixed rate' method of revaluing GMP between leaving and GMP age (likely, as a private sector scheme), the GMP would have been increasing at 6.25% pa, and will continue to do so to GMP age.

“

Will it be better just to keep the pension in the Xerox scheme and just wait until I can receive it, and do you know how many more years I will have to wait?

”

GMP Age for a man is 65. At that point the GMP will stop revaluing at 6.25% or whatever, and instead increase by CPI capped to 3%.

“

Or do I just take the pot and buy a annuity with it.

”

If you want a regular income in retirement, the sticking with the scheme would very probably be the better option. If you were to transfer out, it would be to draw the pension flexibly rather than buy an annuity (which isn't to say you should do that).

“

If I do go down the second route I do know that I will need to get some finance advice.

Looking at the Xerox Final Salary Scheme website, the Normal Retirement Age is 65, so if you take your pension at 55 it is likely to be reduced significantly. The figure of £5,912.56 is I assume the estimated pension you will get if you take it at your Normal Retirement Age of 65.

Your final salary will pay an annuity - and a good one by the seems of it.
Your scheme will have a retirement date. Look for that on paperwork or ring the scheme. Thats when you will receive the benefits. You could retire earlier and get a % of this as long as over 55.

Transfer value of 100k giving a £6k per year annuity. Thats very good.

This was answered above. It seems that the normal retirement age for your scheme is 65, so you can access your pension then.

Most schemes, and I assume yours is the same, will let you take it early from age 55. But the earlier you take it, the more the yearly amount you recieve will be reduced. Eg, if it reduces by 4% per year then you will get 40% less pension at 55.

But you should check with your scheme, as schemes differ. This should be easy for them to answer.

They manage your scheme (found this on the findpensions.gov.uk website) and will know more than us on here. They will explain when you can draw the benefits should you want to access them earlier than scheme retirement date. There's nothing more to tell you.

The age is 65 but I can't get it at 55 because it's under the GMP, so what I'm asking is if I just keep it with Xerox do you think I may get it at say 57, I know that there will be a % drop if I take it early

Not if early retirement means that the GMP won't be covered when it becomes payable.

OP, I presume you are asking for the earliest date at which your GMP would be covered by your pension if paid before age 65. If you ask the administrators, they may or may not be able to give you an indication, but in the absence of a crystal ball won't give you a definitive answer. It's not something anyone here can answer, because it depends entirely on how your pension built up (i.e. how much of it is GMP/how much is 'excess over' GMP).

You don't have £100k in there, you have a promise a lifetime inflation linked income from age 65 and the trustees have assets of £100k notionally earmarked to pay your benefits on which they will earn investment returns over the next 10 years.

What they are saying is that to pay you early would cost more than £100k, even after the early retirement factors are applied, as payment of the GMP would cost more than this. At some future point, the situation may change and at 65, they have to pay it irrespective.

You can request early payment of your deferred benefits (which would be actuarially reduced for early payment).

Because you have a GMP, the GMP test must be carried out.

The purpose of this test is to ensure that if the request is approved, the Xerox pension that would remain in payment at GMP age would be at least as much as you would have received had you not been contracted out of the State Second Pension.

If the GMP test is not met Xerox cannot allow you to receive early payment of benefits

If you were to take the £100k and put it into, say, a SIPP, it could go down in value as easily as up. If the value level pegged, and you took £6K per year as income, then your fund could be exhausted in less than 20 years. Your final salary pension, however, will only go up in value and is payable for the rest of your life.

The value of your DB benefits is greater than £30,000 therefore you would require the advice of a Pension Transfer Specialist (for which you would have to pay and it would not be cheap) before transfer out of your DB Scheme to a personal pension.

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